United States Reaches $37 Million Settlement Of Fraud Lawsuit Against Cigna For Submitting False And Invalid Diagnosis Codes To Artificially Inflate Its Medicare Advantage Payments
Damian Williams, the United States Attorney for the Southern District of New York, and Naomi Gruchacz, the Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today that the United States has filed and settled a civil fraud lawsuit alleging that MORRIS PARK NURSING HOME (“MORRIS PARK”), a skilled nursing facility located in the Bronx, New York, engaged in two fraudulent and illegal schemes that violated the False Claims Act and the Anti-Kickback Statute. The first scheme involved cash payments made to a supervisor at a nearby hospital for patient referrals, and the second scheme involved switching residents’ Medicare coverage without their consent in order to increase the Medicare payments MORRIS PARK received. The United States’ complaint also names as defendants TZODIK WEINBERG, a/k/a “Justin Weinberg,” MORRIS PARK’s former Administrator, and MAIER ARM for their roles in the fraudulent conduct.
Under the settlement agreements approved by U.S. District Judge Jennifer H. Rearden, the estate of the owner of MORRIS PARK at the time of the conduct alleged in the Complaint will pay to the United States $2.85 million, WEINBERG will pay $495,000, and ARM will pay $115,000. Each defendant also made extensive factual admissions regarding their conduct. The settlement with the estate took into consideration MORRIS PARK’s prior voluntary self-disclosure of facts related to the improper changes made to residents’ insurance coverage.
U.S. Attorney Damian Williams said: “Morris Park and its former Administrator prioritized boosting Medicare payments above compliance with the law. They paid cash kickbacks to obtain patient referrals to fill empty beds and switched residents’ insurance coverage without properly obtaining the residents’ consent in order to increase the amount the facility was paid. This Office is committed to pursuing all violations of the Anti-Kickback Statute and other laws designed to ensure that medical decisions are based only on the patient’s best interest.”
HHS-OIG Special Agent in Charge Naomi Gruchacz said: “The misconduct that occurred at Morris Park exhibits the prioritization of profits over residents’ best interests. This nursing home paid illegal kickbacks to manipulate the resident referral process and changed patients’ health coverage selections without properly obtaining their consent, with no apparent concern for how these events could negatively impact residents. HHS-OIG and our fellow law enforcement agencies strive to ensure that entities furnishing services to Medicare enrollees are operating in accordance with federal health care laws.”
Medicare beneficiaries may enroll in Medicare Parts A and B, known as Original Medicare, or in Medicare Part C Advantage Plans (“MA Plans”), which are administered by private companies that contract with the government. Under Original Medicare, the Centers for Medicare & Medicaid Services (“CMS”) directly reimburses healthcare providers, like skilled nursing facilities, on a fee-for-service basis. In contrast, when reimbursing services provided under MA Plans, CMS pays Medicare Advantage Organizations (“MAOs”), which operate the MA Plans, a fixed, capitated amount each month for each Medicare beneficiary enrolled in the MA Plan. CMS advises individuals to consider various factors in deciding between enrolling in an MA Plan or Original Medicare, such as differences in out-of-pocket costs and doctor choice.
As alleged in the Complaint filed in Manhattan federal court:
It is well known within the skilled nursing facility industry that it is usually more profitable for the facility to admit residents enrolled in Original Medicare than in MA Plans. The defendants engaged in two fraudulent and illegal schemes to increase the number of Original Medicare residents at MORRIS PARK.
Payment of Cash Kickbacks for Patient Referrals
From January 1, 2017, through December 31, 2019, MORRIS PARK offered and paid remuneration in the form of cash payments, meals, and sports tickets to a Jacobi discharge planning supervisor (the “Jacobi Manager”) to induce her to refer Original Medicare beneficiaries for admission to MORRIS PARK. For much of this period, MORRIS PARK paid the Jacobi Manager $150 for each referred patient who was admitted to the facility. WEINBERG was responsible for delivering the cash payments personally to the Jacobi Manager, often arranging to meet her at a CVS parking lot close to MORRIS PARK. He regularly reached out to the Jacobi Manager to request patient referrals when MORRIS PARK had empty beds.
MORRIS PARK paid the Jacobi Manager a total of approximately $5,000 to $10,000 for referring dozens of Original Medicare patients for admission to MORRIS PARK. In addition, MORRIS PARK offered the Jacobi Manager tickets to Yankees games, invited her and her staff to a MORRIS PARK-sponsored holiday party, and frequently arranged for food to be delivered to her office.
Scheme to Switch Residents’ Medicare Coverage
From January 1, 2018, through December 31, 2019, MORRIS PARK, at the direction of WEINBERG, disenrolled residents from their self-selected MA Plans and enrolled them in Original Medicare without obtaining the consent of the residents or their authorized representatives. WEINBERG pressured MORRIS PARK staff to disenroll residents from their MA Plans.
MORRIS PARK staff approached residents, often at their bedside, to try to persuade them to switch their insurance coverage. When talking to residents and their families, MORRIS PARK staff typically did not fully explain how the change to Original Medicare would impact the resident’s coverage, including potential changes to the resident’s co-payments and deductibles; the potential loss of supplemental coverage available under the resident’s MA Plan; any resulting change in the resident’s drug plan; or limitations on when the resident could re-enroll in the plan after leaving MORRIS PARK. In most cases, the defendants switched residents’ insurance coverage without getting the residents or their family members to sign a consent form evidencing the resident’s consent to the insurance change. In certain instances, at the direction of WEINBERG, MORRIS PARK staff offered to reduce or waive the co-payments that would be owed by residents under Original Medicare in order to try to persuade them to agree to disenroll from their MA Plan.
In the summer of 2018, on WEINBERG’s recommendation, MORRIS PARK retained WEINBERG’s friend, ARM (who worked at another skilled nursing facility) to assist with the improper disenrollments. MORRIS PARK paid ARM a $1,000 fee for each resident whom ARM helped to switch to Original Medicare. ARM agreed to split this $1,000 fee with WEINBERG, so WEINBERG would pocket $500 for each resident who was disenrolled.
The settlement with the estate of the owner of MORRIS PARK at the time of the misconduct includes the following admissions of conduct:
As part of his settlement, WEINBERG admits, acknowledges, and accepts responsibility for the following conduct:
As part of his settlement, ARM admits, acknowledges, and accepts responsibility for the following conduct:
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Mr. Williams thanked HHS-OIG for its assistance with the case.
This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Jeffrey K. Powell is in charge of the case.